Benefits of Owning Common Stock

Question 1

What three reasons would you include common stock in a client’s portfolio?

Answer 1

1. Hedge against inflation
2. Potential Capital appreciation
3. Income from Dividends

Question 2

What are the risks of owning common stock?

Answer 2

1. Market volatility
2. Potential for decrease or absence in dividend income.
3. Low priority when it comes to company dissolution at bankruptcy - debtors and bonds would be paid first.